If money is just printed paper....

Question

Why doesn't the government just print a little extra and help people out???

Answer 1

Why not let everybody print their own in that case? Better yet just let everybody help themselves to anything they think they want? Skip the money part altogether.

Answer 2

because it makes the money lose its actually value..

Answer 3

Well, that's pretty much what they have been doing. You reach a certain point in which merely printing more becomes meaningless, monopoly money if you will. Well, we're there but the money in your hand is only honored because it has never failed before-even during the big depression when everyone tried to pull it out of the bank but they ran out and there were no federal guarantees. Now all that happens is that they print more money, kind of like during the Wiemar Republic in Germany, which precipitated world war two, and it merely loses value as long as you hold it in your hands. I suppose an alternative would be to buy gold, but then the difference between buying and selling price is so huge(via commissions, brokerage fees,etc) that you would do well to invest in some stable, foreign currency- now, how you do that one with any Federal guarantees is beyond me so we are all basically screwed.

Answer 4

Inflation.  If there is too much money in circulation....the price of goods drops WAY down.

Answer 5

The whole economy would crash if governments printed money willy nilly.

Cash production is strictly controlled and monitored.

Answer 6

The printed paper equates to the value of something. Without value its simply worthless. Until President Nixion; our currency was backed by the gold standard. Currently under the Bush Administration, our Treasury Department continues to print more money without the backing. Thus tourists traveling aboard are facing a rude awaking that the American dollar isn't accepted.  

Answer 7

because each dollar will be worth less. like if a metal is very rare its very valuable, but if there is a lot of it, it loses it's value

Answer 8

Money will be worthless then. Have you heard about the inflation rate at Zimbabwe?

" HARARE (AFP) - Zimbabwe, grappling with a record 2.2 million percent inflation, has introduced a new 100-billion-dollar bank note in a bid to tackle rampant cash shortages, the central bank said Saturday.

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The new note will go into circulation on Monday, the bank said in a statement cited by state media, joining about half a dozen new high denomination notes already issued this year.

In January, a 10-million-dollar note was issued, then a 50-million-dollar note in April. In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for five billion, 25 billion and 50 billion.

The southern African nation, currently gripped by a post-election crisis, has been ravaged by hyperinflation which shot up from 165,000 percent in February to 2.2 million in June.

Independent economists however believe the official inflation figure is grossly understated, estimating it could be running between 10 million and 15 million percent.

Zimbabwe's chronic economic crisis has left at least 80 percent of the population living below the poverty threshold and mass shortages of basic goods in shops."

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Countries devalue their currencies only when they have no other way to correct past economic mistakes - whether their own or mistakes committed by their predecessors.

The ills of a devaluation are still at least equal to its advantages.

True, it does encourage exports and discourage imports to some extents and for a limited period of time. As the devaluation is manifested in a higher inflation, even this temporary relief is eroded. In a previous article in this paper I described WHY governments resort to such a drastic measure. This article will deal with HOW they do it.

For more information, you can visit this link:  http://samvak.tripod.com/nm025.html

Answer 9

It increases inflation which causes us to have to have more money to make it's spending power the same as it was before the extra money was printed.

Answer 10

The Federal Reserve can't just print more currency. Federal Reserve Notes are monetary liabilities for the Federal Reserve. In order for them to increase the amount of currency in circulation, they must increase their assets which consist primarly of governement securites (i.e. US Treasury securities) and discount loans. So basically the US government would have to issue more debt through the Treasury to enable the Fed to increase the amount of currency.  

Answer 11

Look up Catherine the Great and you will see why governments don't do that.

Answer 12

The problem is that our money is currency. The more in circulation the less value it becomes. The US turned to currency in the 1970's and stopped producing money and turned it into currency or fiat currency. The money is not back by gold but a mean to be accepted by payment from the government. So the dollar is not back by gold or anything physical anymore. It based on trade and economic conditions in the US and Internationally. Look up the history of money and you will see the changes money and currency been through

Answer 13

It doesn't work that way my dear. Wish it was that simple.

Congress has to propose a budget which must be approved or veto'd by the President.

http://www.gpoaccess.gov/usbudget/fy09/b...

US deficits devalue the US Dollar, which intern makes the costs of imported goods more expensive - takes more dollars to buy the same stuff - hint OIL!

Since we don't make hardly anything in this country anymore, [due to cheap overseas labor - (China)] thus we import almost everything including food, that is why things get more expensive every year.

Next, Congress tends to stuff all kinds of pet projects in the million page budget that no one reads. They borrow more money from the Treasury with approval of a deficit spending bill passes by both Houses and signed by the President.

The more money the gov borrows the more tax payers will have to pay back with interest in the form of higher taxes, lower benefits, etc.

Answer 14

Kind of confusing, but have you ever heard of fort knox? Theres a bunch of gold there. The mints can't print more money than they can back up with the gold or it would be worthless. Thats why the value of a dollare decreases and increases. Its called inflation.